Hungary: 2022 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Hungary
IMF Staff Country Reports, February 3, 2023
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- Hungary: 2022 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Hungary
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Bibliographic details
- Published: February 3, 2023
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798400228865.002
Key findings and recent developments
- The economy was recovering from the coronavirus disease-crisis but a succession of shocks and loose fiscal policy intensified inflation and fueled a large external deficit.
- The central bank significantly tightened monetary policy in response to rising inflation.
- The government plans a large fiscal adjustment, but regulatory measures undermine the effectiveness of the tighter fiscal and monetary policy mix.
- Growth is expected to slow sharply while inflation remains still-elevated.
- Sizable risks can worsen the outlook; consistent overall policy tightening is needed to address imbalances amid large uncertainty.
Economic outlook and scenarios
- Baseline: Growth slowdown accompanied by still-elevated inflation.
- Downside scenario: Shocks that significantly weaken growth and inflation may prompt a more gradual tightening.
- Upside/inflationary shock scenario: Shocks that intensify inflation would require a faster tightening.
Policy recommendations
- Ensure consistent overall policy tightening to address macroeconomic imbalances.
- Avoid regulatory measures that weaken the transmission and effectiveness of monetary and fiscal tightening.
- Strengthen energy security to help meet climate objectives and reduce vulnerabilities to supply shocks.
- Strengthen governance to improve the business environment and the efficiency of spending.
Risks and priorities
- Large external deficit driven by heightened inflation and shocks.
- High uncertainty—policy stance should remain responsive to incoming shocks and evolving inflation dynamics.
- Structural priorities include energy security enhancements and governance reforms to reduce vulnerabilities and improve economic efficiency.
International Monetary Fund. Hungary: 2022 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Hungary
Content in this bundle
- 1. Fiscal Indicators